Dan Held, the chief marketing officer at Trust Machines, believes that rising Bitcoin transaction fees may encourage users to look at other layer-2 solutions.
The recent Bitcoin 2023 conference in Miami, Florida brought together cryptocurrency enthusiasts and experts from around the world. Among them was Dan Held, a Bitcoin educator and the chief marketing officer at Trust Machines, who shared his insights on the current state of Bitcoin and its prospects.
In an interview with Cointelegraph’s Joe Hall, Held touched upon various topics, including transaction fees, scaling solutions and the evolving narrative around Bitcoin as a means of payment. One of the significant concerns discussed was the recent spike in BTC transaction fees and its impact on the community.
Held emphasized that the increased fees were driven by growing demand for Bitcoin’s block space — particularly due to the emergence of ordinals, such as Bitcoin nonfungible tokens and BRC-20 tokens. “This is a good thing for Bitcoin, as it solves its long-term security model,” Held said, adding that the “fee spike is a good reason for folks to go look at different solutions and start to plan around that.”
When asked about Bitcoin’s potential shift from a payment method to primarily a settlement network, Held acknowledged that this transition had been anticipated for some time. He referenced Nic Carter, who wrote about this possibility and presented it at the MIT Bitcoin Expo in 2018.
Held drew an analogy between cargo ships and containers, likening the Bitcoin network to a cargo ship and the transactions within it to containers. He explained that layer-2 solutions, like the Lightning Network, enable the bundling of numerous transactions, thus reducing the load on the base layer.
“Cargo ships have many, many transactions or containers on top, and the cargo ship itself would be a layer 1,” Held said, adding:
“Transaction containers are like little L2 transactions that are bucketed [and] brought together into one L1 transaction. That’s how Lightning works, right? You open and close a Lightning channel, but the open and closing of a channel could represent thousands or millions of transactions on L2.”
Held said it was “entirely predicted that Bitcoin on L1 would just be for large-value settlements. Bitcoin transaction fees will rise far higher than here.”
In the interview, Held also stressed the importance of embracing various Bitcoin layers and not overly fixating on a single solution like Lightning. He mentioned other L2 options, such as Liquid and Rootstock, as viable alternatives.
Regarding the scaling lessons that the Bitcoin community can learn from Ethereum, Held emphasized the need for openness and agnosticism. He urged the community not to punish developers working on different layers or chains.
He shared, “Lightning is not a catch-all like this. Like, Lightning is great, and I’m not trying to diminish it, but there’s an obsession with Lightning. And I think a lot of podcast-type Btcoiners who weren’t technical just kept championing that as the only solution. No, there’s other ones: Liquid, Rootstock, Stacks. And we have to be more agnostic and not try to, as a community, punish people who go work on one chain or one layer or the other.”
Held also pointed out the need to educate users in regions like Africa and South America about the benefits of other L2 solutions, which can facilitate low-fee transactions.